Recent Domain Name Cases: Beijing Cinet vs Ikea

Ikea had registered the trademarks "IKEA" and "IKEA & Device" in numerous countries and regions and had opened many large, single-brand chain stores. Commencing in 1983, Ikea registered the trademarks "IKEA", "IKEA & Device" and "宜家"* in China for several classes of goods. In 1998, Ikea opened large furniture stores using the mark "IKEA" in Shanghai and Beijing. On November 19 1997, Cinet applied to China Internet Network Information Center (CNNIC) to register the domain name "ikea.com.cn" but did not actually use it on a computer network.

The Second Intermediate People's Court of Beijing Municipality held that Ikea had registered and used the trademark "IKEA" in China and in numerous other countries and regions and that the said trademark was relatively familiar to consumers and enjoyed a good reputation among the consumers. In China, the trademark "IKEA" was known to the relevant public due to Ikea's active promotion of its unique operational method and its good service. Accordingly, the trademark "IKEA" should be recognized as a well-known trademark.

Conflicts of rights arising on computer networks are regulated by relevant laws and standards. By using Ikea's well-known trademark "IKEA" as a domain name, Cinet confused consumers into believing that there was a certain connection between Cinet and the well-known trademark "IKEA". Objectively speaking, Cinet used the goodwill attached to the well-known trademark and impeded Ikea's exercise of its rights on computer networks. Accordingly, Cinet's act infringed upon the exclusive right to use the said well-known trademark. Although Cinet did not actually use the domain name, its eventual sale at a high price as the subjective motive for its bad faith registration was abundantly clear. Cinet's act violated the basic principles of fair competition and good faith and constituted unfair competition. As Cinet's act violated the relevant provisions of the PRC Administration of the Registration of Domain Names for the Chinese Internet Tentative Procedures, ran counter to the spirit of the Paris Convention for the Protection of Industrial Property (the Paris Convention) and the basic principles of China's Anti-unfair Competition Law, and infringed upon the lawful rights and interests of Ikea as the owner of the exclusive right to use the well-known trademark, Cinet should bear the attendant civil liability. Pursuant to the first paragraph of Article 2 of the PRC, Anti-unfair Competition Law, the Second Intermediate People's Court of Beijing Municipality rendered the following judgment: the domain name "ikea.com.cn" registered by Cinet is invalid and Cinet shall immediately cease use of and de-register the said domain name.

THE CURRENT CASE

Being dissatisfied with the judgment of the court of first instance, Cinet appealed to this Court on the grounds that the procedure employed by the court of first instance to recognize "IKEA" as a well-known trademark was unlawful and that there was insufficient evidence therefor; that there was no factual basis for determining that Cinet's registration of the domain name "ikea.com.cn" impeded the exercise by Ikea of its rights in the well-known trademark on a computer network; that there was insufficient evidence for determining that it was abundantly clear that Cinet's subjective motive for its bad faith registration of a large number of domain names without using them was to eventually sell them at a high price; that the court of first instance had been mistaken in the law applied and Cinet had not violated China's Anti-unfair Competition Law or the Paris Convention; and that the court of first instance should not have used the PRC Administration of the Registration of Domain Names for the Chinese Internet Tentative Procedures as the basis for its judgment. Ikea complied with the judgment of the court of first instance.

Through the trial, this Court held: China and the Netherlands are both signatories to the Paris Convention. As a legal person incorporated in the Netherlands, Ikea has the right to institute proceedings in a Chinese court in accordance with the Paris Convention if it considers that its legitimate rights and interests have been infringed in China. The Chinese court should try the case in accordance with Chinese laws and the Paris Convention.

The trademark registration certificates provided by Ikea evidence that Ikea is the owner of the exclusive right to use the registered trademarks "IKEA", "IKEA & Device" and "宜家".*

A domain name is the name and address of a user on a computer network. It is a mark used to differentiate the user from other users and functions as a distinguishing factor. In this case, the part of the Cinet registered domain name "ikea.com.cn" that serves to differentiate it from other domain names and that functions as a distinguishing factor is the third level domain name "ikea". As the word "ikea" is identical to the trademark "IKEA" registered by Ikea with the Trademark Office of China, it is sufficient to cause the relevant public to confuse the two.

Cinet failed to present any evidence that it enjoys any rights or interests in the word "ikea" or that it had any legitimate reason to register the domain name "ikea.com.cn". Furthermore, it did not actually use the domain name after registering the same. As a business providing computer network information consulting services and online services, Cinet ought to have been aware of the function and value of domain names on computer networks. Its use of Ikea's registered trademark "IKEA" as the distinguishing third level domain name in its registered domain name despite being aware of the function and value of domain names clearly demonstrates its intent, for a commercial objective, to block Ikea's registration of the said domain name. The said act was done in bad faith and violated the principle of good faith specified in China's Anti-unfair Competition Law, thus constituting unfair competition against Ikea. Accordingly, Cinet should bear the attendant civil liability. Therefore Cinet's stated grounds for the appeal, viz., that its act did not constitute unfair competition against Ikea, are untenable.

Although the court of first instance mentioned the PRC Administration of the Registration of Domain Names for the Chinese Internet Tentative Procedures in its judgment, it did not use the same as a basis for its judgment. Therefore, Cinet's stated grounds for the appeal, viz., that the PRC Administration of the Registration of Domain Names for the Chinese Internet Tentative Procedures were applied in the judgment of the court of first instance, are untenable.

In the trial of civil disputes involving computer network domain names, the determination of well-known trademarks is in essence the acknowledgment of objective facts, so a people's court may, at the request of a party and in accordance with the actual circumstances of the case, determine whether the registered trademark involved in the case is a well-known trademark. Therefore, Cinet's stated grounds for the appeal, viz., that the court of first instance violated statutory procedures in recognizing Ikea's registered trademark "IKEA" as a well-known trademark, are untenable.

The evidence presented by Ikea is not sufficient to establish that its registered trademark "IKEA" had become a well-known trademark at the time Cinet registered the domain name "ikea.com.cn". In accordance with China's Trademark Law, the registration of the domain name "ikea.com.cn" by Cinet did not constitute infringement upon Ikea's exclusive right to use its registered trademark "IKEA". Therefore, Cinet's stated grounds for the appeal, viz., that Ikea's registered trademark "IKEA" was not a well-known trademark and that Cinet did not infringe upon Ikea's exclusive right to use its registered trademark, are tenable.

THE JUDGMENT

In summary, the judgment of the court of first instance failed to make a clear determination of some of the facts and this should be corrected. Pursuant to Item (3) of the first paragraph of Article 153 of the PRC Civil Procedure Law (中华人民共和国民事诉讼法) this Court renders the following judgment:

(1) Civil judgment (1999) Er Zhong Zhi Chu Zi No. 86 rendered by the Second Intermediate People's Court of Beijing Municipality is quashed.

(2) Beijing Cinet Information Co., Ltd. shall cease its infringement against Inter Ikea Systems B.V. (of the Netherlands) and deregister its registered domain name "ikea.com.cn" within 10 days of the entry into effect hereof.

Of the first instance case acceptance fee of Rmb1,000, Rmb50 shall be borne by Inter Ikea Systems B.V. (already paid) and Rmb950 shall be borne by Beijing Cinet Information Co., Ltd. (to be paid within seven days after the effective date hereof). Of the second instance case acceptance fee of Rmb1,000, Rmb50 shall be borne by Inter Ikea Systems B.V. (to be paid within seven days after the effective date hereof) and Rmb950 shall be borne by Beijing Cinet Information Co., Ltd. (already paid).

Translator's Note:

*This is the Chinese name for "Ikea".

This is an edited translation of a Beijing Municipality, High People's Court Civil Judgment issued November 2001.